You are probably familiar with how life insurance works, but do you know how permanent insurance works?…
Term Life Insurance
Term life insurance offers coverages for a particular time period i.e. the term. If you were to die within the term, your beneficiaries will receive your death benefit– this is a set amount of money agreed upon in the policy. Term life insurance is often purchased by parents who have dependent children to worry about.
Permanent Life Insurance
Permanent life insurance provides lifelong coverage. Not only is the death benefit guaranteed for the rest of your life, you are also able to accumulate cash value on a tax-deferred basis. This means that whenever you need the money for any reason, it will be there.
But How Does Permanent Life Insurance Build Wealth?
If you have ever thought about using your tax refund to grow your wealth, you should probably be looking into permanent life insurance. The difference between a term life policy and a permanent life policy is similar to the difference between leasing your car and purchasing it. Permanent life insurance means you own something of value that has equity. This means that even if your death benefit is never claimed, you still have money that can be used on whatever you need it for. Clients have the ability to access the money in the cash value of their permanent life insurance policy. This has enabled many to use their money when they need to– like coming up with a down-payment for a home, having an emergency fund if necessary, etc. Many people have outlived their term life insurance policies. This alone is enough to explore other options.
What are the Benefits of Permanent Life Insurance?
Aside from building your wealth, there are other rewarding benefits of having Permanent Life Insurance…
- Consistent Returns – Having a steady return is sure to bring you peace of mind. Assess the difference in the cash value’s rate of return to saving and the money market accounts’ rates of return. In most cases, the cash value is significantly higher. Be weary of comparing your rate to stocks’ rates. Even though they can provide you with a nice return, you are taking a much greater risk if things do not go as expected.
- Plenty of Options – You may have been led to believe that there is only one kind of permanent life insurance. Thankfully, that is not true– there are four types. The difference being whether or not you are paying a fixed or variable premium and you plan to invest the money saved.
- Continuous Coverage – Unlike term life, permanent life insurance does not end. As long as you are paying your premiums, your coverage continues.
- Expenses Typically Decrease Over Time – For most, permanent life insurance usually becomes cheaper the longer you keep your policy. You might be surprised to learn that eventually your permanent life insurance policy will begin to pay for itself– yet another benefit.
- A Few Perks You Can Take Advantage of While You Are Still Living – There are several permanent life insurance policies that will allow you to create a plan that suits your current needs so that you can experience a few living benefits, such as…
- Critical Care Coverage in the event that you accrue expenses following a health crisis.
- Long-Term Coverage should you need home health care, an adult daycare, or assisted living or nursing home care.
- Accelerated Death Benefit allows you to access money from your death benefit should you develop a terminal illness.
You Can Transition Your Term Life to a Permanent Life Policy
There are some term life insurance policies that will allow you to convert them into a permanent life insurance policy down the road. We do recommend considering a policy that does. This allows you to avoid running into any complications with getting a permanent life insurance policy. As you age, your health changes and unfortunately, this can prevent you from being able to get a perm-life policy. Securing a term to perm policy while you are still young and in good health can help you avoid this.
Rollins Insurance is an independent insurance agency providing our clients the best prices with the most coverage possible since 2008. We represent multiple A-rated insurance companies to make sure we deliver the most competitive rate packages to our clients in Kentucky and Ohio. We find that most people are under-insured and over-paying when we meet them. We love what we do and our primary business is Personal Auto, Homeowners, and Life and Health insurance. We are a family-owned and managed business that specializes in providing needs-based insurance services.
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